The 2025 Ontario budget: Takeaways for the energy sector

On April 15, 2025, the Ontario government published its 2025 Budget—A Plan to Protect Ontario (the “budget”). This budget, shaped by ongoing trade pressures and surging energy demand, plans for substantial investment in the energy sector, as well as changes to its regulatory approach for project approval processes.

Here are the key takeaways from the budget, as well as the legal and commercial implications for project developers, investors and stakeholders.

Key takeaways

The energy mix continues to diversify in response to surging energy demand—with an emphasis on renewables:

• Ontario has expanded its long-term energy procurement target from 5,000MW to 7,500MW—making it the largest procurement target in the province’s history.[i] The procurement invites operators across solar, wind, and hydro technologies to compete for contracts, diversifying the makeup of the province’s energy supply mix.
• A substantial $4.7 billion investment in hydroelectric expansion and refurbishment reflecting a growing emphasis on grid flexibility and low carbon sources of power.[ii]
• The budget also highlights added financing for alternative fuel projects: hydrogen is emerging as an energy source of interest for the province, with growing investments in the sector, and another round of the Hydrogen Innovation Fund. The province is committing $30 million to accelerate the development of hydrogen blending projects and low-carbon fuel innovation.[iii]The development of forestry-based biomass energy resources as an energy source is also expected to benefit from this budget, with an additional $60 million investment into the province’s Forest Biomass Program.[iv]

Trade pressures with the United States led to streamlining energy supply chains and a focus on critical infrastructure projects:

• The One Project, One Process model is indicative of Ontario’s desire to streamline the regulatory landscape for mining projects. The new approval model (reminiscent of the ‘Single Window’ approach for renewable energy projects aspired to during Ontario’s Feed-in Tariff program years) is intended to streamline required project approvals into one process, coordinated by a dedicated Mine Authorization and Permitting Delivery Team, led by a team lead within the Ministry of Energy and Mines.
• In addition, the Building Ontario Fund increased its capital allocation from $3 billion to $8 billion.[v] The fund is targeting investments in energy infrastructure, transportation, affordable housing and long-term care.

Expanding opportunities for Indigenous equity participation

• The budget also enhances the scope of Indigenous economic participation through an expansion of the Indigenous Opportunities Financing Program (“IOFP”). The available loan guarantees under the IOFP have been tripled to $3 billion and eligibility has been broadened beyond the electricity sector to include projects in mining, critical minerals and broader resource development.[vi]

Nuclear energy remains the cornerstone of Ontario’s long-term energy strategy:

• The budget builds on the ambitious expansion of the province’s nuclear footprint through new funding for large-scale nuclear development, in addition to the substantial funds already invested in the development of small-modular reactors (“SMRs”) and the extension of the life cycle of current large-scale nuclear plants.[vii]

Diving deeper into the budget

Expanding nuclear energy

The budget heavily emphasizes nuclear energy as a cornerstone of Ontario’s present and future energy supply. With construction of Canada’s first grid-scale SMR reactors advancing, the first SMRs in the country should be active and connected to the grid on schedule.

The province has also unlocked funding to accelerate the feasibility studies of new large-scale nuclear projects. The government has also extended the life of active reactors through comprehensive refurbishments.

These additional plants could add up to 14,000 MW to the grid, contribute billions to the province’s economy and solidify nuclear energy’s role as the energy backbone of the province for the foreseeable future.

Diversifying the energy mix

Ontario’s surging demand for energy is driving a large-scale energy procurement strategy, which the 2025 budget has expanded to 7,500 MW. This procurement strategy invites wind, solar and other renewable energy projects to compete alongside conventional energy sources.

As part of this large-scale procurement effort, the province is planning a substantial $4.7-billion investment in hydroelectric generation capacity. Existing hydroelectric facilities will be refurbished and expanded—and two additional hydro stations will be considered—as part of a push to solidify hydroelectric power as a source of clean energy in Ontario.

Hand-in-hand with generation, energy storage is emerging as a focus area for the province, with the government advancing on energy storage projects. Through planning support and permitting facilitation, the province is underscoring the importance of large-scale storage projects in its approach to growing a clean energy grid and inviting innovators in this space to collaborate on strengthening these kinds of projects as actors in Ontario’s energy mix.

Hydrogen and clean fuel innovation

The budget emphasizes an ongoing effort to boost the electricity grid with hydrogen, planning for a greater role in innovative low-carbon fuels, such as hydrogen, in Ontario’s energy supply. In line with its Low-Carbon Hydrogen Strategy, Ontario aims to build on its successes with a new round of financing from the Hydrogen Innovation Fund, with $30 million earmarked for projects that would accelerate hydrogen’s footprint in Ontario’s economy.

For companies in the energy, tech and utilities space, these initiatives present opportunities to pilot innovative technologies with financial and regulatory support from the province.

The province is also hoping to encourage breakthroughs in alternative fuel sources like forest biomass. The budget aims to invest a further $60 million into its Forest Biomass Program to expand the volume of wood harvested from Crown forests, support the sustainability of biomass operations and ensure a cross-platform engagement alongside municipalities, industry, Indigenous communities and stakeholders to identify and develop sustainable forestry infrastructure.

Regulatory reforms and streamlined approvals

Trade frictions with the United States have led to a push for greater self-reliance in energy and critical supply chains. This is highlighted by a convergence towards a One Project, One Process permitting model that will see streamlined approval processes for mineral and energy infrastructure projects.

The Ring of Fire, for instance, has been a priority of the government, which, in collaboration with First Nation communities, has promised to not only tap the region’s mineral resources but to usher in “major new investments in infrastructure and energy transmission” as part of a push to get resources to market as quickly and efficiently as possible.

Energy infrastructure projects (such as new transmission lines or generation facilities) and operators in the sector can reasonably be expected to benefit from consolidating approvals processes. Assessment concurrence—such that overlapping federal assessments are effectively eliminated—would allow energy infrastructure operators to develop projects on simpler, more efficient and more cost-effective terms.

Opportunities for Indigenous equity participation

The budget will expand Indigenous equity ownership opportunities under the IOFP–tripling the facility’s capacity to $3 billion and broadening its scope beyond electricity projects to include pipelines, mining, critical minerals and other major resource infrastructure projects.

This expansion reflects a political and policy commitment to increasing Indigenous ownership and long-term participation in Ontario’s energy and resource sectors.

By facilitating Indigenous equity positions in large-scale developments, the IOFP hopes to streamline infrastructure development by encouraging mutual alignment between project developers and Indigenous communities, while supporting more equitable distribution of economic benefits and reinforcing Indigenous leadership in Ontario’s energy landscape.

Looking ahead past the budget

Ontario, through its 2025 Budget, is aiming to build strengthened capacity in the energy sector. With new and ongoing investments in new nuclear, expanded hydroelectric capacity, large-scale procurements of renewable energy and storage, as well as support for nascent and emerging technologies, such as hydrogen, the province is taking a comprehensive approach to address the dual pressures of rising electricity demand and global chain uncertainty.

Operators in the energy, infrastructure and mining sectors should take note of the arising opportunities and appetite for expedited project development, as well as implications for financing and regulatory support. By understanding the budget’s key measures and their implications, stakeholders can position themselves to succeed in Ontario’s dynamically evolving energy sector.

For further information regarding Energy and Infrastructure project development in Ontario, we invite you to contact a member of our Energy Group.